John Berlau, my former colleague at the Competitive Enterprise Institute, adds to my list of the goodies big drug companies receive in the Senate health-care reform bill. Berlau flags the bill's provision prohibiting the use of pre-tax Health Savings Account money to buy over-the-counter drugs. This tax hike thus pushes more people to buy more expensive prescription drugs, which still, of course, get favorable tax treatment.
OTC drugs are much cheaper those available for prescription, but they could now be more expensive to individual consumers given that prescription drugs would still be eligible for favored treatment in the tax plans, and that insurance companies would be mandated to cover many of them. Consequently, any time a consumer has the slightest headache, the financial incentive would often be to see a doctor and get a prescription rather than go to the store and get medicine off the shelf. This could mean that billions will be wasted on the additional costs for prescription drugs in instances when OTC medicines could be just as safe and effective at treating the illness.